NEW DELHI, November 11: The tug-of-war between the Turner Morrison Group and Jenson & Nicholson (J&N) took a fresh turn on Monday when the Company Law Board (CLB) granted an ad-interim stay restraining the Rs 150-crore paint major from issuing further equity or preferential capital.

J&N had cancelled a Rs 18.63 crore rights issue last year on the ground that the Turner Morrison Group was attempting to take over the company by ``surreptitiously'' picking up the unsubscribed portion of the issue. The issue was cancelled after share certificates had reached the hands of investors.

J&N is controlled by the Patna based Sinha family who holds a 35 per cent stake in the Rs 4.13 crore equity of the company. The Turner Morrison Group's holding would have gone up to a threatening 15 to 17 per cent had subscription to the rights issue been allowed to be registered. On top of this, the Morrison Group was intent on coming out with an open offer for further enhancement of holdings. The CLB order says that ``relief is granted in view of apprehensions of the petitioners that the board of the company (J&N) may proceed to take action in pursuance of the resolution of the board dated 20th May, 1997''. The resolution pertains to issue of a Rs 10 crore preference issue through the private placement route to finance its expansion plans. The next date of the hearing has been fixed for December 1. The CLB order follows from the events of November 1996 when the Turner Morrison Group's holding went up to 13.5 per cent of J&N's capital and it began the legal process of notifying the company and the concerned stock exchanges of the fact that it's holding had exceeded five per cent of the capital. The J&N management reacted quickly -- four days after the Turner Morrison notice, it issued advertisements in newspapers to the effect that it had obtained legal opinion that the rights issue had failed and the board had resolved to cancel the shares that had already been allocated. In other words, the management had ordered that the capital be shrunk. Reacting to complaints, the Securities & Exchange Board of India (SEBI) debarred J&N from coming out with a fresh public issue for two years. But the Calcutta High Court set aside the SEBI order and J&N came back to the market with a Rs 10 crore preferential issue. Of this, Rs 5.70 crore had already been allocated. SEBI had now filed an appeal against the High Court judgment but there is no injunction against issuance of capital against J&N. Speaking to The Indian Express, S Subberwal, J&N's managing director said that the Calcutta High Court had given the company a clean chit, upholding the contention that Turner Morrison's application was invalid and the management was within its rights to cancel the issue.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.